Mayor warns that Government shake-up of council funding could badly hit Tower Hamlets

19th December, 2018

The Government has launched a consultation on proposed new funding arrangements for local councils. The so-called ‘Fair Funding Review’ will likely see funding moved away from areas of higher deprivation to more affluent areas, warns Mayor of Tower Hamlets John Biggs.

Exact details of the impact are not yet known, leaving councils in a position of uncertainty as they plan for the future. The Institute for Fiscal Studies (IFS) has warned that the Review “could hit inner London and help suburban England”.

The consultation proposes a new adjustment on how councils are funded based on ‘remoteness’, which could further disadvantage inner city areas like Tower Hamlets as other areas are prioritised.

The Government also last week published its provisional local government finance settlement for 2019/20 – which had been postponed amidst Brexit chaos. The IFS has further warned that the funding settlement “benefited councils serving richer areas more than councils serving poorer areas” and that overall funding for local government in England is set to be £0.6 billion less in real terms than it was in 2015-16, even after adding in business rates and council tax.

Tower Hamlets Council has seen its core funding cut by £148m – 64% in real terms – since the Government’s austerity programme began in 2010.

Mayor of Tower Hamlets John Biggs said: “This Conservative Government’s announcement of additional funding for local authorities simply does not stand up. We have seen a 64% cut to our core funding since 2010 in Tower Hamlets.

“As we go into the New Year the ‘Fair Funding Review’ looms over inner city areas like Tower Hamlets as the government looks set to move the goal posts and redistribute money from deprived areas like ours.

“I will be lobbying government along with other London borough leaders against further austerity, and continue to stand up for our residents to protect funding for the services they rely on.”

Cabinet Member for Resources, Councillor Candida Ronald, said: “The Government needs to recognise that the overall budget for local government needs to increase, rather than focusing on wholly unfair schemes to redistribute money from inner city areas to Conservative shire constituencies. It’s clear from the Government’s plans that austerity is far from over for local councils.”